Tuesday, October 15, 2019

Corn lost ground over the past week, while soybeans and wheat were a bit firmer. These changes can be tied directly to the monthly USDA demand/supply report that was released on Oct 10.

The US corn yield estimate was raised.2 bushels/acre compared to the Sept. report, to 168.4. Traders had expected a lower yield. They also lowered projected 2019/20 usage by 90 million bushels.

The net result is a projected carry out (CO) of 1.929 billion bushels, compared to 2.114 billion for the crop year just ended. That is still nearly a 9% drop, bushels traders had expected a much lower CO of 1.784 billion., so the report was considered negative.

The soybean yield was lowered 1 bushel/acre to 46.9, which is well below last year’s 50.6. Adding in the drop in old crop stocks reported on September 30, the CO was lowered 180 million bushels to 460 million. In USDA’s June report, they reported the CO would be 1.045 billion.

This continues the pattern where USDA seriously overestimates the soybean carryout all year. You would think if you error in one direction consistently, you would adjust for those miscalculations, but that doesn’t seem to be the case.

US wheat ending stocks remain stubbornly stuck at over 1 billion bushels Unfortunately, that’s a big number. The US is becoming a smaller and smaller factor in world wheat fundamentals, as its acres are in a long-term downtrend.

The 15-month US/China trade war continues. Last Friday, it was reported phase 1 of 3 would be signed shortly. It supposedly included large purchases of US ag products by China. Now they’re saying that may not be the case…again.

Illinois passed new dicamba laws for spraying on soybeans, as they had over 900 injury cases this past summer. Dicamba now can’t be sprayed past June 20. In 2019, that date was July 15. They also can’t spray it if the temperature is over 85 degrees Fahrenheit.

Livestock prices rose sharply in the past week, especially hogs. However, that is just recovering some of their recent losses. Asian importing of meat products will be with us for the foreseeable future, which will be supportive.

The US dollar index was weaker, which was likely the main reason our dollar gained this week, causing a small drop in Ontario basis values. Basis values in US terms are higher than normal, as elevators bid up for the smaller North American crops to fill their storage space.